As traders, one of our responsibilities is to spot patterns in the market and then exploit them as long as they keep occurring.

After spotting a specific pattern, we use it to guide our trading decisions until the pattern fails and a new one emerges in its place.

There’s a specific short-term pattern that’s been occurring after every single pullback (retracement) in 2015 so let’s take a look at it, see how it played out again perfectly yesterday, and be on guard for this pattern to stop working.

Here it is in the S&P 500:

In simplest terms, after a sell-swing (retracement) against the ongoing uptrend, buyers flood the market and boost prices sharply higher after even the slightest pullback.

This highlights bullish dominance of the market as liquidity continues to float prices higher.

Simply note the big green highlighted bars (days) after every last pullback in price.

Instead of a stable reversal (intraday) as we saw at the highs before a sell-swing, each reversal back to the upside occurred on a huge surge of buying pressure, thrusting the market straight up in a Trend Day – not a gentle reversal at all.

One Response to “A Pattern of Huge Rallies after Sharp Selloffs”

Frankly speaking, I am not a huge fan of short term trading since the risk is just too large to ignore, if we wish to get consistent profits then it’s with better patterns and long term trading. I am lucky to not worry over analyzing with OctaFX broker, it has their own analysis service and it’s so accurate that one does not need to think much after following it and most times it leads to great results and I am the living example of it.